Corona crisis - (non-) implementation of resolutions affecting liquidity

Companies are faced with enormous economic challenges due to the current corona crisis. For an indefinite period of time, large parts of the economy are in locked down, and many companies have to cope with massive drops in sales. Just a few weeks ago, the extent of the economic impact as it becomes obvious now was not foreseeable, and even today no company can conclusively how badly it will finally be affected by the crisis. Against this background, the question therefore arises for members of the board of a German public limited company (Aktiengesellschaft, AG) and managing directors of a German private limited company (Gesellschaft mit beschränkter Haftung, GmbH) as well as the management of the general partner of a company in the form of GmbH & Co. KG, whether they must implement resolutions which have already been effectively adopted before the extent of the Corona crisis became known or whether they are entitled or even obliged not to implement resolutions which provide for a considerable outflow of liquidity (distributions, transactions, entering into long-term contracts, etc.). Company law indicates a clear path for the managing director or member of the board:


If the economic situation, as is currently the case in the Corona crisis, has deteriorated considerably between the time when resolutions are adopted (e.g. appropriation of profits) and measures affecting liquidity (e.g. distribution of dividends), the board member or the managing director must critically review the new situation. All interests concerned, including those of the shareholders, must be included in this review. If the board member or the managing director comes to the conclusion that compliance with the resolution would mean a considerable disadvantage for the company, there is not only a right but even an obligation not to implement the distribution resolution.

For the individual board member or the managing director, this results from his or her duty to
observe the diligence and conscientiousness of a prudent businessman in the management of the company (for the AG please refer to Section 93 (1) of the German Stock Corporation Act (Aktien-gesetz, AktG) and for the GmbH to Section 43 (1) of the German Limited Liability Companies Act (GmbH-Gesetz, GmbHG).

If the board member or managing director does not comply with this obligation, he or she may be liable for damages.

If the board member or managing director comes to the conclusion in the course of its reassessment that the measure affecting liquidity (e.g. distribution) not only entails (considerable) disadvantages for the company, but that this may even result in the insolvency of the company, the obligation of the board member or managing director to refrain from the measure affecting liquidity also arises from Section 92 (2) AktG and Section 64 GmbHG, respectively.

The board member or the managing director is therefore obliged not to implement the resolution (e.g. a distribution may not be made) if this leads to considerable disadvantages for the company or to insolvency. However, the resolution cannot simply be ignored. Rather, the board of directors or the managing director must convene a general meeting or shareholders' meeting, in compliance with the relevant provisions of the law and the articles of association. In the course of this new meeting, the shareholders have to be informed about the changed situation and a new resolution on the measure affecting liquidity (e.g. appropriation of profits, transaction) must be brought about which takes account of the changed circumstances.

With regard to the passing of shareholders' resolutions and the holding of general meetings or shareholders’ meetings, the German Bundestag recently simplified the procedures in order to allow companies to adopt necessary resolutions despite the existing restrictions on the possibility of holding meetings so that they continue to be able to act. In this respect, we refer in particular to our articles "Adjustments to company law in the course of the Corona pandemic".


Daniel Fehling, LL.M. (Auckland)

Dr Florian Schulz M.B.A. (Nimbas)

Dr Florian Schulz M.B.A. (Nimbas)
+49 40 18067 18023

Jan-Patrik Müller

Jan-Patrik Müller
Senior Associate
+49 40 18067 12857